Recently, large movie theaters have been coming onto the market, particularly in rural areas. With a decline in rural populations and the expansion of online video (OTT) services, the formula that buildings housing large theaters could generate stable revenue has been broken.
According to Real Estate Planet on the 15th, there are numerous movie theaters for sale on the market. The current listings from Real Estate Planet include MegaBox, Lotte Cinema at Hwaseong Hyangnam, Daegu Plaza, Daegu Sangin, Seongseo, Busan O2, Gwangmyeong, and Doksan, along with Busan Dae Young Cinema, totaling nine locations.
Previously, buildings occupied by large movie theaters were regarded as investment venues capable of generating stable revenue due to long-term lease contracts. Consequently, asset management companies have been buying theaters to utilize them as underlying assets for their funds.
However, due to the economic downturn and the decline of the film industry prompted by the expansion of OTT, large multiplex operators have begun to terminate lease contracts primarily at underperforming locations, making theater buildings less attractive as investment options. Particularly in rural areas, where the population is also declining, the inventory of theaters for sale is increasing.
According to statistics from the Korean Film Council, the total number of moviegoers in the country last year was 123.13 million, a 1.6% decrease compared to the previous year. This is less than half of the number of moviegoers prior to the COVID-19 pandemic. As a result, the performance of domestic multiplex operators has also been weak. MegaBox recorded an operating loss of 13.4 billion won last year, marking five consecutive years of deficits since 2020. CGV achieved an operating profit of 75.9 billion won last year, but recorded deficits in its domestic operations. Lotte Cinema's operating profit last year was just 300 million won.
Even if theaters come up for sale, they do not sell easily. This is due to the challenging situation of the film industry's rebound, resulting in low investment demand for theaters. Even if one acquires a theater, maintaining the long-term lease contracts like before has become difficult. Continual cases of multiplex operators terminating long-term lease contracts to improve their financial structure are emerging. Additionally, even if a theater is purchased, its nature offers little possibility for repurposing it as another retail space, which complicates finding buyers for theaters.
An official from an asset management company that is pursuing the sale of a theater stated, "We are seeking to sell the theater due to the fund's maturity, but since it has not sold, we have extended the fund's maturity," adding, "We will continue with the building sale."